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Enron Mail |
Good Morning,
Attached, please find the latest issue of our Independent Power Weekly. <<IPW061801.pdf<< Summary: 1. IPPs Fall 5.1% Last week our IPP composite fell 5.1%, outperforming the NASDAQ (-8.1%), but lagging behind the S&P 500 (-4.0%). AES Corp. was the strongest performer in the group, rising 3.8%. NRG Energy was the weakest performer, falling 11%. 2. Investors Focus on Today's FERC Meeting Putting pressure on stock prices, investors expressed concern regarding the FERC's special upcoming meeting, scheduled for today (6/18). At today's meeting the commission is expected to extend the scope of its previous April 25 California market mitigation order. In particular, we expect FERC to: 1) Extend floating power price caps to all hours; and, 2. Extend floating caps to other western states. 3. Minimal Impact on IPPs We believe the expansion of the FERC's current market mitigation plan will have an immaterial impact on the Independent Power Producers with California exposure-AES, CPN, MIR, NRG, and RRI. Our reasons are as follows: 1) The bulk of their capacity is sold forward; 2. The FERC's methodology is benign; and, 3) Valuations already reflect political uncertainty and normalized power prices. 4. NRG Hosts Conference Call On Friday (6/15), NRG hosted a conference call to address investor concerns surrounding near-term equity needs, pending acquisitions and recent regulatory developments. On the call management noted that: 1) Barring a major acquisition, it will not issue equity in the near-term; 2) NRG's pending acquisition of 1,767 MW of generation capacity from Conectiv should close by June 30; and, 3) Expansion of the FERC's Western market mitigation measures should not impact NRG's performance. Also on the call, management reaffirmed its previous 2001 EPS guidance of $1.35. . Trading at 13.2 times our 2002 estimate versus a group average of 16.1 times, NRG represents the best relative value in the IPP group. We believe this discount is unwarranted and reiterate our Buy rating and $37 price target. 5. Review of ORN Analyst Conference On Tuesday (6/12), Orion Power hosted its first major investor conference in Baltimore, Maryland. The meeting featured presentations from 10 senior managers. We do not believe investors were previously aware of the full breadth and depth of the management team. While no major announcements were made, the meeting served to confirm that ORN is on track to achieve its strategic and growth objectives. 6. Coverage of GEG Initiated with a Buy Rating On June 11, 2001 CSFB initiated on Global Power Equipment Group (GEG) with a Buy rating and a twelve-month price target of $42. We co-cover GEG with John McGinty--CSFB's machinery analyst. Regards, Neil Stein 212/325-4217 Bryan Sifert 212/325-3906 This message is for the named person's use only. It may contain confidential, proprietary or legally privileged information. No confidentiality or privilege is waived or lost by any mistransmission. If you receive this message in error, please immediately delete it and all copies of it from your system, destroy any hard copies of it and notify the sender. You must not, directly or indirectly, use, disclose, distribute, print, or copy any part of this message if you are not the intended recipient. CREDIT SUISSE GROUP and each of its subsidiaries each reserve the right to monitor all e-mail communications through its networks. Any views expressed in this message are those of the individual sender, except where the message states otherwise and the sender is authorised to state them to be the views of any such entity. Unless otherwise stated, any pricing information given in this message is indicative only, is subject to change and does not constitute an offer to deal at any price quoted. Any reference to the terms of executed transactions should be treated as preliminary only and subject to our formal written confirmation. - IPW061801.pdf
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